PRESENTED TO PARLIAMENT
HONOURABLE LESTER B. BIRD
PRIME MINISTER AND MINISTER OF FINANCE
ON MONDAY, 31ST MARCH 2003
KEEPING HOPE ALIVE
Madam Speaker, I rise to present the Budget for 2003 at
a deeply troubling time for the entire world. Few could
have foreseen that so soon into the 21st Century, a war
would be raging in Iraq, States would be deeply divided,
economic prospects would be dim, and global stability
would be uncertain.
condemn unreservedly any Government or State that
threatens the security of its neighbours and violates
the human and civil rights of its own people.
States and Governments should be brought to book by the
international community acting collectively and through
the institutions that we have toiled these last fifty
years and more to construct.
the same time, we are concerned that the forces of
unilateralism are seeking to overthrow multilateralism
in the present world order.
Organizations, such as the United Nations, which were
painstakingly built to promote, preserve and protect the
integrity and well being of all nations, have been
brushed aside as irrelevant.
is not a view shared by my Government.
Indeed, quite the opposite is true. We regard the United
Nations and the Security Council as vital to our own
protection against adventures by larger and more
powerful states in both military and economic terms.
us, the Security Council should not be compromised or
undermined by any actions that are inconsistent with the
UN Charter. Once this occurs, the world will be governed
not by the authority of the law, but by the command of
Small nations, like ours, are particularly vulnerable to
adventures in their many forms, but no nation is immune
from them as 9/11 proved.
this connection, the need for the United Nations and for
the authority of the Security Council has never been
greater than it is now. For, all nations now depend on
others for cooperation and collaboration in their
As I begin this Budget presentation which sets the
parameters for our nation's fiscal survival, I take this
opportunity to reaffirm my Government's commitment to
the supremacy in international affairs of the United
Nations and the principles enshrined in its Charter. No
country is an island unto itself; each is intertwined
one with the other; each is reliant on collective
respect for international rules and norms.
Madam Speaker, in recent years, when small countries,
such as ours, have sought to compete with larger and
more powerful States, we have faced the prospect of
blacklisting and sanctions.
our right to compete in the global marketplace has been
This, Madam Speaker, is the state of the world in which
Antigua and Barbuda, now finds itself. It is not a world
in which we will survive unless we have a coherent and
cohesive strategy that is executed with the wisdom of
knowledge, and the power of good judgment that can come
only from experience.
Government is resolute and resolved to press on in spite
of the many odds against us. We do not underestimate
them, but we are confident in our ability to confront
them and, eventually, to overcome them.
are some of the challenges that we as a people must face
A perusal of the 2003 Estimates of Recurrent Revenue and
Expenditure provides us with some insight.
fiscal year 2003, recurrent revenue has been put at five
hundred and sixty-three million, one hundred and seven
thousand, six hundred and sixty-two dollars
($563,107,662), and recurrent expenditure estimated to
be six hundred and twenty-seven million, three hundred
and ninety-eight thousand, six hundred and forty dollars
will observe, Madam Speaker, that estimated expenditure
outstrips estimated revenue by some sixty-four million,
two hundred and ninety thousand, nine hundred and
seventy-eight dollars ($64,290,978).
is clear that the gap between the levels of revenue and
expenditure needs to be narrowed and therein lies the
crux of our challenge.
The Wage Bill
Madam Speaker, we all know why this Government faces a
gap between revenue and expenditure. Plainly and simply,
it is our large public service and a very significant
wage bill is estimated at approximately 74% of recurrent
Budget Statements have made mention of this matter, and
outlined Government's intention to rationalize its
workforce through the implementation of a number of
These measures were determined by a number of
assumptions, the main one being that the private sector
would have been more robust in coping with the global
economic downturn. This appears not to have happened,
despite the many incentives and concessions offered by
is worthy of note that while the overall rate of
unemployment in the country has increased, so too has
government's expenditure on salaries and wages.
has occurred because the Government has had to continue
to absorb workers severed from the private sector.
Madam Speaker, this should surprise no one.
has been a long-standing policy of the Government, to
use employment as a tool to stave off poverty and its
attendant social ills, such as crime, truancy and
method of poverty alleviation has served its purpose
well and continues to do so.
the last two months, Government has not been able to pay
all public servants on time. The monthly income simply
did not meet the monthly expenditure.
my Government pointed out in the Throne Speech, we may
have paid late, but we did pay. None went without; all
received a piece of the pie.
could have taken the decision to lay-off hundreds of
public servants, and so reduce the wage bill. Had we
done so, we would have been praised by the international
that praise would have come at a high price to all our
people, not only those that we dismissed. The price
would have been an economic downturn as less goods and
services would have been bought. In turn, this would
have led to lay-offs in the private sector and a
continuous downward spiral in economic activity.
Additionally, crime would have increased. A hungry man
is not only an angry man, he is also a desperate man. To
survive, many would have turned to crime threatening the
safety of our people and requiring greater expenditure
on policing, law enforcement and jails.
do not believe that the benefit of that light was worth
the price of the candle. Life in our society would have
become intolerable, and our economy would have sunk to a
level from which it would be difficult to recover.
However, Madam Speaker, Government has reached its
optimal level of employment and can no longer carry the
burden of employment alone. We are, therefore, freezing
all employment except for work contracted out for
specific tasks at specified rates.
addition, we shall do all that is possible and prudent
to encourage the private sector to increase employment.
We will further facilitate an environment that
encourages new investment, both local and foreign, in a
wide variety of productive fields.
Madam Speaker, tackling the wage bill will be a major
step forward in addressing our overall fiscal situation.
Citizens should be aware, however, that the size of the
public sector is not simply the Government's problem; it
is a national problem, requiring that we all should
participate in its solution.
means that we will expect the Unions and workers to
contribute by accepting that if Government is to pay all
those now on its payroll, there can be no unreasonable
demands for wage increases, and patience will have to be
shown when delays occur in payments.
alternative is retrenchment and the kind of social and
economic consequences that none of us wish to see.
Government will implement measures to reduce the wage
bill through a freeze on employment, not replacing
workers who leave, and promotions within the service.
Madam Speaker, with regard to revenue, a successful
campaign to collect long outstanding arrears is in
recent efforts have been recognized and applauded both
at home and abroad. Our hard work has been reflected
mainly in the improved collections of corporate income
Total collections from the corporate income tax, which
held steady at around thirty to thirty-five million
($30m - $35m) over 2000 and 2001, rose to fifty-five
point five million ($55.5m) for the fiscal year ending
31st December 2002.
harness with this campaign, the Government's revenue
policy is being revised to facilitate enterprise and to
encourage compliance with tax laws while at the same
time offering tax concessions and incentives to our
Madam Speaker, we recognize that over the years the tax
system has become complicated.
too many nuisance taxes have been introduced over the
years to cope with the rising demands on government to
provide more education, more health facilities, better
roads, improved communications, expanded water supplies
and so on.
system needs urgent reform.
this connection, my Government has identified a number
of areas that it will address. Some of these include:
· Restructuring the tax department to provide better
taxpayer services; reducing transaction costs;
strengthening planning and research capacity; and
establishing performance standards;
· Redesigning procedures and the legal framework to
increase compliance and enforcement;
· Enhancing human and physical resources to foster
efficiency in service delivery;
· Strengthening processes for tax transactions to
accommodate e-commerce and e-government;
· Speeding up the judicial process for tax collection
and the resolution of tax disputes; and
· Improving communication with taxpayers and between tax
are confident that these reforms will improve the
environment for tax assessments, tax compliance and tax
collection making it easier for all concerned.
Madam Speaker, the Government continues to pursue
efforts to improve its debt servicing. It is obvious
from my earlier remarks that if as much as 74% of our
revenue was not being spent on our wage bill, we would
be well able to service our debts in a timely fashion.
Nonetheless, it is a tribute to our skills in allocating
scarce resources that we have either paid off, or
rescheduled, much of our debt and we continue to service
2003 provision for public debt servicing represents
17.6% of the budgeted recurrent expenditure as compared
to 23.2% in 2002.
During 2002, the Government refinanced a portion of its
domestic debt, which resulted in monthly savings of
ninety thousand, six hundred and eighty-two dollars
($90,682) in loan payments.
further repayment of $5.8 million of domestic loans in
2002, further contributed to the reduction in budgetary
provisions for debt servicing in 2003.
the course of fiscal year 2003, we intend to renegotiate
a number of our external loans. When many of these loans
were contracted, interest rates in the market were as
high as 10%; today interest rates are closer to the 4%
mark. It would be usurious if in the current market,
interest on these loans continued to be applied at high
rates. Therefore we believe that there is every chance
of renegotiating these loans successfully.
Financing the deficit
mentioned earlier, Recurrent Expenditure exceeds
Recurrent Revenue by sixty-four million, two hundred and
ninety thousand, nine hundred and seventy-eight dollars
Government intends to finance this deficit by actively
pursuing a policy of privatization of publicly held
assets. Assets that have been earmarked for sale include
the Royal Antiguan Hotel, Newport and holdings in West
Indies Oil Company Ltd.
Moreover, Government is also studying proposals made by
the IMF and by the Tax Reform and Administrative
Commission, concerning the tax status of Statutory
the best way of implementing these recommendations are
settled, then Statutory Bodies such as the Antigua and
Barbuda Social Security Scheme and the State Insurance
Corporation would be required to pay corporate income
tax as is required by privately owned corporations.
addition, Government revenues could well benefit from
offers that are now before Cabinet for consideration, in
respect of the Half Moon Bay property. These offers have
been made by a number of bona fide investors who are
prepared to offer fair value as soon as the property is
free from encumbrances.
THE ROLE OF GOVERNMENT
what Madam Speaker, should the role of Government be
with respect to the transformation process?
few months ago, OECS Heads of Government commissioned a
study of the fiscal situation in each of our countries
and asked the Commissioners to make recommendations on a
number of matters, including the role of Governments.
This is what they said in their preliminary report:
Governments will need to actively support the economic
transformation of the economies. In this regard,
governments should conceive of themselves as
institutional innovators finding new organizational and
management structures to develop the potential for new
economic activities. Government will need to provide the
initiative, the initial thrust of innovation, some of
the start-up finance, and the mobilization of the
different partners required for developing the project."
Madam Speaker, I submit to you that successive Labour
Party Administrations have been of this view from the
inception of their role in government.
Government of Antigua and Barbuda has involved itself
directly in the productive sectors of our economy and
continues to do so. The landscape of our Country bears
me out on this point for it is dotted with the results
of our foresight and innovation: the Royal Antiguan
Hotel; the Heritage Quay Shopping Complex; the Heritage
Market; the recently commissioned Nevis Street Pier; and
the Mount St. John Medical Centre, just to name a few.
respect to the notion of finding new organizational and
management structures, the Government's latest
initiative is reflected in its commitment to
establishing the Tourism Development Corporation (TDC),
which, together with the Ministry of Tourism, will
manage and administer our tourism industry, repackage
our tourism product and boost Antigua and Barbuda's
profile in the market place.
Madam Speaker, the focused attention that the Government
is placing on the constitution of the TDC is also
reflective of its belief that the time has come for the
Government to play a more facilitative role and for the
private sector to come into its own.
For years, the Government has been the main "mover and
shaker" in our economy, presiding over low inflation and
unemployment rates and over consistent economic growth,
identified as 2.7 percent in 2002 and projected to be
3.2 and 4.0 percent in 2003 and 2004 respectively .
Government has piloted a development process that has
seen Antigua and Barbuda outrank the majority of
countries in the world in the United Nations Development
Programme's Human Development Index. Many of the
countries we surpassed are industrialized nations across
short, Madam Speaker, our Citizens and all others who
reside in this Country, have superior access to better
health care than most; are better schooled than most;
and all in all live and experience a better quality of
human existence than most.
Government's commitment to preserving our superior
standard of living is reflected in its expenditure
profile for the Budget Estimates of 2003, which shows
that health, education public works, and public safety
programmes will receive the lion's share of Recurrent
Ministry of Health and Social Improvement accounts for
13.05% of budgeted Recurrent Expenditure translating to
eighty-one million, eight hundred and sixty-seven
thousand, seven hundred and sixteen dollars
is the largest allocation to any Ministry.
Under its direction, a number of programmes are
executed, including: Primary Health; Secondary Health;
General Health and Environmental Health. Through
execution of these programmes, the many Health Care
facilities, including clinics, and the Holberton
Hospital fulfill the expectations of the majority of
Antiguans and Barbudans by providing affordable and
effective health care services.
addition, the Central Board of Health is also provided
with resources in order that it may execute successfully
its programmes in respect of the environment.
Ministry of Education, Culture and social Improvement
receives the second largest allocation for the execution
of programmes in Pre-School and Primary Education,
Secondary Education, Tertiary Education and General
The allotment to this Ministry is sixty-nine million,
four hundred and ninety-two thousand, five hundred and
seventy-three dollars, ($69,492,573) representing 11.08%
of total Recurrent Expenditure.
cumulative investment made by successive Labour Party
Administrations in these areas has led to the creation
of a labour force that is highly qualified and vastly
the many instances where ability and determination have
been demonstrated, students have been assisted through
the provision of scholarships and other forms of
meaningful and tangible support.
consider this one of our greater achievements: that
Antiguans and Barbudans can travel the world over and
feel confident that their education has provided them
with a basis for exceptional performance in their
various fields of endeavour.
Ministry of Labour Cooperatives and Public Safety
accounts for the next largest portion of Recurrent
Expenditure, without considering the Ministry of Public
Through the programmes of Justice, Security and Civil
Rights and Governance and Democracy, the stability and
tranquility for which Antigua and Barbuda is known and
which underpins our main industry, Tourism, is
are a nation that is proud of our heritage of peaceful
democracy, and we aim to sustain and maintain our record
of peace and peace keeping. Toward this end, the
Government has allocated 8.44% of Recurrent Expenditure,
or fifty-two million, nine hundred and sixty-six
thousand, three hundred and fifty-three dollars
($52,966,353) for the maintenance of law and order in
our civil and labour relations.
bulk of Capital Expenditure is geared towards
reinforcing the Government's commitment in the areas of
health, education and public safety, and is vested in
the Ministry of Public Works.
way of the programme, Public Buildings, the Ministry of
Public Works, Communications and Insurance, is the
agency that will ensure that the
about-to-be-commissioned Mount St. John Hospital is
completed, that a number of projects aimed at improving
accommodations for the police and military are
concluded, and that our inventory of class rooms is
Apart from its responsibility for Public Buildings, the
Ministry of Public Works is also responsible for the
upkeep and construction of roads, and will be continuing
its road programme throughout this year.
projected expenditure to service and maintain roads,
drains and road equipment, as reflected in the
programmes under Transportation and Roads, Streets and
Drains, is $46.5 million.
increase over the 2002 allocation for Transportation
resulted from the reclassification of Maintenance to
Roads and Drainage of $20 million from recurrent
expenditure to development expenditure.
There is still a significant amount of work to be done
on the upgrade of the facilities at the V. C. Bird
International Airport, and the laying of the parallel
taxiway. The funds identified for the Upgrade of V.C.
Bird International Airport reflects the amount needed to
complete Phase 1 of this project in financial year 2003
with the disbursement of the remaining portion of the
There will be continued development of our Education
facilities with the upgrading of the Antigua State
College. Construction of the new laboratory was
completed in 2002 and funds have been identified in the
2003 estimates to furnish the facility as matter of
respect to Tourism, the continued development of our
human resource will take precedence in 2003.
this regard, Government is anxious to re-open the
Antigua and Barbuda Hospitality Training Institute (ABHIT),
which has a crucial role to play in preparing our people
for the challenges that globalization and trade
liberalization present. My Government views its
investment in ABHIT as a response to the strong
competition being faced globally in the Industry.
Madam Speaker, the Government continues to strengthen
the capacity of the military and paramilitary forces to
protect the interests of our community.
this post 9/11 era, when the issue of security is
receiving highest consideration, it is imperative that
Antigua and Barbuda not be found lacking and that our
way of life , be maintained.
this regard, we have a particular incentive to ensure
that our air and seaports are safe, and that our
neighborhoods remain peaceful and free from serious
allocation of $8 million is provided to facilitate the
purchase of vehicles and equipment for the fire brigade,
military and police. Funds have also been allocated
under Public Buildings for the construction of new
Government continues to fulfill its social mandate. This
is evidenced by the successful completion of the
sanitary landfill at the Cooks disposal site, in
collaboration with the OECS Solid Waste Management
2003 my Government's attention will focus on Night Soil
Eradication. We intend to expend $1.5 million on this
Development projects in Barbuda have been allocated $19
Joint Consultative Committee, consisting of
representatives of the Central Government and the
Barbuda Council, has agreed on these projects. Their
implementation should considerably improve the quality
of life for Barbudans by generating new employment and
is important to point out at this juncture that the
resurfacing of the airstrip in Barbuda is a component of
Central Government's capital expenditure and is, in
fact, in addition to the $19 million already allocated.
ANTIGUA AND BARBUDA -
Madam Speaker, in recent years, the economic path upon
which we have traveled has not been easy. And, we
anticipate an even rougher road as we continue to strive
for development in and unhelpful international
the journey has been rewarding.
There have been those who sought to take advantage of us
because of our size and vulnerability, never expecting
that we would have the temerity to fight back.
Where we have fallen short in riches and international
clout, we have more than made up for in resourcefulness
this regard, organizations such as the OECD have rued
the day that they did not take us seriously. Now, on the
basis of sound argument and reasoning, Antigua and
Barbuda's stance on a number of international issues is
regarded with admiration and respect; among them our
insistence that there should be a level playing field
for all with no discrimination in favour of the
jurisdiction now boasts one of the best regulated, and
supervised financial services sectors in the world -
even better regulated than some OECD members.
the heels of our passing the criteria in respect of
counter money laundering, established by the Financial
Action Task Force (FATF) our reputation was further
enhanced just recently when Antigua and Barbuda passed,
with flying colours, a Caribbean Financial Action Task
Force (CFATF) evaluation of our anti-drug trafficking
and counter-terrorism regimes. Madam Speaker, I submit
that we have every reason to be proud of our
we are not yet finished.
Right now the employment of hundreds of our people,
particularly our young people, is being threatened by
the attitude of some persons in the US Congress who,
either do not appreciate the extent to which Antigua and
Barbuda has a well regulated and supervised Internet
Gaming industry, or are influenced by a Gaming Lobby in
the US which wants to protect itself from competition.
cannot sit by and do nothing while bread is taken out of
the mouths of our people. And, we will not.
Consequently, a few days ago, we requested consultations
with the Government of the United States in the World
Trade Organization on the issue of offshore gaming
Internet and electronic commerce offer opportunities to
small economies such as ours to diversify and create
high quality jobs. This is why we have tried to attract
investment in the sector of Internet gaming in a
licensed, fully regulated and responsible environment.
United States, which is not only a major consumer but
also a massive producer of gaming services takes the
view that only American business can offer gaming
services to American consumers. The United States
Government is therefore making it increasingly difficult
(and, probably, ultimately impossible) for Antiguan
gaming companies to market their services to US
legal advisers have assured us that these actions by the
United States are contrary to the international treaties
governed by the World Trade Organization.
Madam Speaker, one of the main objectives of the WTO is
to introduce the rule of law in international trade
relations and to ensure equality before the law for all
countries, big or small, rich or poor. It allows for
States that are close friends and partners such as
Antigua and Barbuda and the United States, to peacefully
and legally settle their trade differences.
the Government has decided to use this mechanism, which
the United States has itself utilized in its disputes
with others, to reach a settlement of this problem.
believe we have a strong legal case, and while we are
prepared to litigate this matter to a satisfactory
conclusion in the WTO, we do hope to reach a
satisfactory amicable settlement with the United States
government as soon as possible in order to protect this
important niche to our economy.
government is resolved to defend the interests of our
people. We have an obligation and a right to do so, and
we will not flinch from them.
Madam Speaker, let me details the tax concessions that
my Government has introduced or will introduce to
encourage the private sector to invest in the economy
and to employ more people.
Recently, we amended the Hotels Aid Act giving
unprecedented relief to existing hotels as well as to
amendment provides tax relief, ranging from complete tax
holidays for seven (7) years to twenty-five (25) years
for entire hotel properties, whenever there is any
construction or expansion under prescribed
is consistent with the Government's policy of promoting
tourism and is intended to give a fillip to fresh
investments and employment opportunities in this most
vital sector of the economy.
have already lowered the corporate income tax rate from
40% to 35%.
pleased to announce my Government's proposal to consider
lowering corporate income tax still further to 30%
during the course of the next year.
Government is aware that some may argue that to
contemplate lowering the rate of corporate income tax at
a time when expenditure is greater than revenue is
Those who support this argument have no faith in the
Government is convinced that if we ease the tax burden
on businesses, they will invest the windfall in either
expanded or new enterprises and, thus, create new
employment and further economic activity.
the next few months, we will engage the private sector
in discussions on how they could utilize the proposed
further reduction in corporate income tax to help to
expand the economy and increase employment.
Madam Speaker, rates on withholding tax have also been
reduced from 40% to 25%.
again pleased to announce a further reduction in taxes
with respect to the purchase of motor vehicles.
will reduce to 50% of the CIF, the customs duties,
consumption and customs service taxes, which in
aggregate have accounted for between eighty-five and one
hundred and five percent (85% - 105%) of the cost
insurance and freight value of vehicles.
Government offers this particular initiative as a
blanket concession to our bus drivers, taxi operators,
business owners and to individuals in general.
this connection, the Ministry of Finance will suspend
the granting of individual concessions on vehicle
Madam Speaker, as my Government pointed out in the
Throne Speech at the opening of this Parliament, we are
especially proud of the benefits of our tax policies to
the "small" people of Antigua and Barbuda.
is worth recalling the facts that were detailed in the
There are now six credit unions with a membership of
over 16,000 persons. These six credit unions have
savings in excess of $29 million, assets of more than
$42 million and investments that exceed $10 million.
This clearly shows that the ordinary man and woman in
our country has benefited from the employment and tax
policies of my Government.
amount of savings in our domestic banks is also an
indication of how all our people generally, including
the private sector and professionals, have benefited
from my Government's policies.
the end of December 2002, there was $2.1 billion in
savings in our banks, an increase of $67.6 million over
these savings were the highest per capita in the Eastern
Caribbean Currency Union.
are a true indication that our people have befitted and
done remarkably well under the policies of this
have every reason to be proud of this significant
Madam Speaker, there are no drums of war in our country;
no screaming missiles; no thundering bombs. We live our
lives in relative comfort and ease.
the conduct of this country's affairs, my Government has
sought no enemy and spurned no friend.
While we have stood up for our nation's rights in the
international community, we have done so on principle
and in the context of well established law and precedent
Within our society, while we have our political
differences, those differences have been managed with
respect for human and civil rights.
have no political prisoners, no tribal discrimination,
no curtailment of fundamental freedoms.
have given no excuse to any to seek to abridge our
independence or compromise our sovereignty.
is a blessed country where we are free of the scourge of
war and the abuse of dictatorial regimes.
our society, government has acted to promote our
national interests abroad, and to manage peacefully the
contentions over our common interests at home. We are a
stronger nation and a better people for it.
are fortunate to be living here and not in the
maelstroms in other parts of the world where human
suffering is now so widespread.
Madam Speaker, I am delighted to present this Budget
which is free of any new taxes and which, instead, gives
sensible tax concessions, to our business sector and to
our people, designed to expand our economy and increase
Government is of the view that the pillars of our
democracy are good health, superior education, and a
social environment that is vibrant and safe for leisure
and for enterprise.
these pillars will rest other building blocks of a sound
economy and a self-reliant society: opportunity,
personal growth, meaningful livelihoods, confidence and
Budget is intended to promote the maintenance and
development of the resource that is most fundamental to
our advancement: the people of Antigua and Barbuda,
particularly our youth.
Madam Speaker, I therefore recommend this Bill to the
Honourable House and in so doing wish to thank Senator
Asot Michael, Junior Minister of Finance; the Financial
Secretary and Deputy Financial Secretary; the Budget
Director and his team; and all who worked diligently
towards the preparation of this Budget.
Thank you, Madam Speaker